An Emergency Fund is super important. There are many theories on how much one
should stick away, but it is really up to the individual as far as what one is
truly comfortable with. I take my
monthly expenses into account so I know the bare minimum amount I need each
month and then multiply that by six months to determine what I consider to be
enough. Since I don't want to have to
save up a ton of money into this fund I want to keep my monthly expenses as low
as possible.
I only touch this fund if there is no other possible way to
pay an expense. If I've exhausted all
other avenues and there is simply no other way to meet my obligation then I
will use this fund. Once I've done that
I will do everything I can to put those funds back in place quickly so I have
them restored and ready in case of another emergency.
If you do not have an emergency fund I encourage you to decided
on an amount and fully fund one as soon as possible. Even if you can put away three or six months
worth of funds establish something.
Something is always better than nothing.
And then once you have that in place bump it up 25% to 50% and fund that
amount as well. You will breathe much
easier knowing that you have that money in place. Just in case.
Because, speaking from experience and we are all experiencing it at the
moment, you just never know what might happen.
I am from the Suze Orman school of financial management - and have a nice size emergency fund. I started it in November 2015 after I paid off my house. Some months I couldn't put much in it ; but I put what I could and I never touched it. So now I am using some of it. The only problem is I hate dipping into it.�� I just have to tell myself it is a blessing to have it.
ReplyDeleteExactly right Connie. That is what it is for. Take care and stay safe! :o)
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